The Securities and Exchange Commission announced today that Chief Judge Gregory M. Sleet of the United States District Court for the District of Delaware entered final judgments against Defendants Nathan M. Michaud and Gerard J. D’Amaro on January 24, 2012, and Defendant Marc J. Riviello on February 3, 2012, in SEC v. Dynkowski, et al., Civil Action No. 1:09-361, a stock manipulation case the SEC filed on May 20, 2009, and amended on March 25, 2010 to charge additional individuals. The SEC’s complaint alleges that Michaud, D’Amaro, and Riviello each participated in market manipulation schemes with Defendant Pawel P. Dynkowski.
As alleged in the complaint, the schemes generally followed the same pattern: Dynkowski and his accomplices agreed to sell large blocks of shares for penny stock companies in exchange for a portion of the proceeds. The shares were put in nominee accounts that Dynkowski and his accomplices controlled. The defendants artificially inflated the market price of the stocks through manipulative trading, often timed to coincide with false or misleading press releases, and then sold shares obtained from the issuers and divided the illicit proceeds.
The complaint alleges that in 2006, Dynkowski, Riviello, Michaud and others participated in a manipulation scheme involving the stock of Asia Global Holdings, Inc., which generated over $4 million in illicit profits. As alleged in the complaint, Dynkowski and Michaud manipulated the price of Asia Global Holdings, Inc. stock using wash sales, matched orders, and other manipulative trading, while Riviello used his position as a registered representative at a broker-dealer to open a series of nominee accounts and execute sell orders for shares obtained from the issuer. The complaint further alleges that Riviello helped launder proceeds from a separate manipulation scheme involving the stock of GH3 International, Inc.
That same year, the complaint alleges, Dynkowski, D’Amaro and others participated in a manipulation scheme involving the stock of Playstar Corp., which generated over $1 million in illicit profits. As alleged in the complaint, D’Amaro arranged for the company to issue misleading press releases that coincided with Dynkowski’s manipulative trading. The complaint further alleges that D’Amaro provided the nominee accounts that were used to sell the shares received from the issuer.
To settle the SEC’s charges, D’Amaro consented to a final judgment that permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, orders disgorgement of $177,044 and prejudgment interest of $40,859, and bars D’Amaro from participating in any offering of a penny stock. In a related criminal case, D’Amaro previously pled guilty to conspiracy to commit securities fraud and engage in money laundering and was sentenced to three years in prison and ordered to pay criminal forfeiture of $1.49 million. U.S. v. D’Amaro, Criminal Action No. 09-54-SLR (D. Del.).